Digital Market wins pact to fine-tune EC product

By Heather Harreld

Dec 01, 1996

The Defense Advanced Research Projects Agency last month awarded a $3 million contract to Digital Market Inc. to advance the testing and development of the company's electronic commerce (EC) product to support electronic systems manufacturing.

The contract which will be managed by Wright-Patterson Air Force Base Ohio will develop the use of Digital's digital.market to enable the exchange of digital information between a government agency or a commercial buyer of electronic components and its distributors.

With digital.market buyers can purchase semiconductors electromechanical switches routers and other components via the Internet to repair replace conduct small-scale manufacturing or build prototypes of printed circuit boards and other systems.

Stephen Gold Digital's vice president of marketing said digital.market increases flexibility and reduces material costs and lead times for procuring these components by 30 to 70 percent. Lead times will be whittled from days or weeks to minutes.

"The goal of the product is not to change how a buyer goes to market but [to] ensure productivity and efficiency gains " he said. "It mirrors the typical role we would associate with an inside sales person at a distribution center."

Buyers can complete the entire transaction for components using digital.market: searching for and selecting parts requests for quotations purchase orders order confirmations change orders change acknowledgments and status changes.

As part of the project Wright-Patterson officials will choose a demonstration site to build military systems using digital.market to electronically purchase the components from participating distributors. Distributors that are now participating with Digital include All American Bell Industries Bell Microproducts Milgray Electronics Pioneer Standard Electronics Inc. and Sager Electrical Supply.

Distributors pay a transaction fee to Digital which provides the service free to buyers.The participating distributors are the largest of the 20 national component distributors and they control $3 billion of the $12 billion market Gold said.

The departments of Energy Transportation Treasury Commerce and Veterans Affairs have instituted pilot EC programs and are in various stages of launching the programs throughout those agencies. These agencies have been moving to comply with a presidential mandate that requires agencies to use EC by January for many of their procurements. But doubts about the security of EC and the use of transaction and electronic data interchange standards have hampered the widespread acceptance of EC.

Digital has its eye on the civilian market but for now the company is interested in using the DARPA project to act as a springboard for broader use of digital.market in the Defense sector Gold said. Wright-Patterson officials will help the Sunnyvale Calif.-based company introduce the product to various Defense agencies as part of the project.

Nicholas Naclerio assistant director of DARPA's Electronics Technology Office said the project is designed to explore a new procurement paradigm. Military systems are usually built in small volume and the cost of using a telephone to purchase the parts often is greater than the cost of the parts.

Although DARPA traditionally distances itself from molding policy Naclerio said the Defense Logistics Agency which is more involved in setting procurement policy will be involved in the development and use of digital.market.

"We're going to show how you can design procure and manufacture quickly [and] inexpensively " he said.

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